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China: RRR likely in October as growth momentum deaccelerates - Nomura

FXStreet (Delhi) – Research Team at Nomura, suggest that amid weak Chinese growth momentum, they see downside risks to their Q3 GDP growth forecast of 6.9% y-o-y and maintain the call for policy remaining on an accommodative bias in Q4.

Key Quotes

“Our proprietary indicators (Nomura’s China Composite Leading Index and China Growth Surprise index) continue to point to weakening growth momentum. The China Composite Leading Index (CLI) continued to fall in August. In August, seven components contributed negatively to the CLI, up from six in July. The decline in the CLI is consistent with signs of weak growth momentum.”

“Our Monetary Policy Signal Index indicates a relatively high likelihood (0.77) of easing in October. The China Growth Surprise Index (CGSI) dipped further into negative territory in September, mainly weighed down by negative surprises from industrial production, fixed asset investment, imports and new RMB loans in August. The falling growth surprise index suggests soft growth momentum and points to continued depreciation pressures on CNY.”

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